Lower oil prices hamper Shell as output stalls

OIL major Shell shouldered a 15 per cent fall in current cost of supply (CCS) profit in the third quarter, as it warned of global economic weakness across the board.

Net profit on a CSS basis over the three months to September was $6.1bn (£3.8bn), down from $7.2bn in the third quarter of last year, hurt by lower oil and gas prices and a US shale gas writedown.

Excluding exceptional items, earnings came in at $6.6bn, a six per cent drop year on year.

“We’re seeing evidence of a weak economy all around us in our downstream, marketing and our chemicals business,” warned Simon Henry, chief financial officer at the Anglo Dutch oil giant.

Upstream production, typically the driver of profit over the long term, fell to 2.9m barrels of oil a day in the period, a mere one per cent increase on the previous quarter.

Shell held its interim dividend at 43 cents a share, an increase of one cent year on year.

This year has been an active one for Shell, with $6bn of disposals and an equal amount of acquisitions.

In September, the oil major said it would begin a drilling programme in the Arctic sea as part of a multi-year exploration plan.

On the back of its results, Investec upgraded the stock from “sell” to “hold”, with a target price of 1,936p.

Investors reacted positively yesterday to the results, as shares closed up 2.33 per cent.